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Throughout Metro Boston, communities make land use decisions in geographic silos even though development, especially large-scale development, has impacts beyond municipal borders, and the property tax ramifications of development decisions will skew communities’ decisions. 

15)    Create tax-sharing districts for major developments
Municipalities can work together to plan for large developments that span multiple municipalities through the use of tax sharing districts.  Tax-sharing districts are inter-municipal agreements to distribute the revenue from a designated area according to a mutually agreeable formula.  The land use advantage of these agreements is that it allows municipalities to plan for large sites that span multiple municipalities without regard to municipal boundaries.  Participating communities will have more flexibility to plan for growth where it makes sense from a land use perspective, rather than seeking to maximize tax revenue generation within the municipal boundaries.  

Massachusetts has applied regional tax sharing solutions to land use and economic development challenges both at Fort Devens and the South Weymouth Naval Air Station.   In both cases, special legislation created the governance structures for communities to plan together and to share the benefits of large-scale development on those redevelopment parcels.   

Cross-municipal development sites and proposals large enough to merit a tax sharing district are not common in Metro Boston.  However, they do exist and MAPC should be ready to support the use of this innovative tool to support sustainable planning on these sites.  MAPC should identify sites where such a tool might be applied and conduct outreach to the appropriate municipalities. 

15.a    MAPC should inventory potential tax-sharing districts and conduct outreach to appropriate municipalities

16)    Establish a metropolitan tax sharing program
A desire for increased property tax revenue colors almost every land use decision in Metro Boston, sometimes conflicting with other planning and economic development goals.  Many of these decisions are driven by a perception that new residential development “costs” a municipality more in services than it generates in tax revenue, and vice versa for commercial and industrial development.  This "fiscalization of land use," as this problem is known, fosters unsustainable land use and unproductive competition among cities and towns.  Communities may discourage moderately priced housing through large lot zoning, or encourage economic development when the transportation and water infrastructure is not available to support it.  Regional inequity ensues, as the commercial and industrial tax base moves from urbanized areas to less developed locations, and state funding follows to pay for the infrastructure needed to support that growth.  

Regional tax-base sharing offers one way to alleviate this problem. Under metropolitan tax-base sharing, all of the municipalities within a metropolitan area agree to share a portion of tax proceeds from new development.  This reduces intra-regional competition; facilitates other planning goals such as preserving open space or maintaining a vibrant downtown; encourages suburbs and urban areas to cooperate on regional economic development goals; and leads to a more equitable distribution of tax burdens and public services.

Examples across the country show that tax sharing can help create cohesive, regional decisions related to development and environmental impacts.  For example, in 1972 the New Jersey Meadowlands Commission created a master plan that implemented tax sharing among 14 communities in the Meadowlands as a way to develop the region in an intelligent, cohesive way and that model stands as an example of forward-thinking land use in New Jersey.

The revenue subject to tax sharing could include either or both the commercial/industrial tax revenue and the “excess” residential tax revenue (the portion in excess of a certain value, such as 150% of the regional median home price).  In order to prevent manipulation of contributions, municipalities would apply a metropolitan tax rate to the portion of the assessed value that is directed to the regional pool.  The portion of the assessment retained locally would be assessed at a locally determined rate.  The revenue collected in the regional pool would be allocated according to the fiscal capacity measure described in Strategy #1. 

16.a    MAPC and allied organizations should develop a proposal for a metropolitan tax sharing program

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